Dismissed

R Karthikeyan v. Rbl Bank Limited

DRT20 Mar 2025SA/299/2023

Case brief

AI extract

What is this about?

Debts Recovery Tribunal dismissed an application challenging a bank's possession notice under the SARFAESI Act, holding that the secured creditor validly issued the demand and possession notices after classifying the account as NPA.

What did the court decide?

The present Securitization Application stands dismissed and the measures taken by the Bank are held as valid.

R Karthikeyan versus Rbl Bank Limited — Banking and Recovery | DRT (2025)

SA No.299/2023

20.03.2025

IN THE DEBTS RECOVERY TRIBUNAL-III, CHENNAI

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Dated this the 20^th day of March, 2025

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Present: SMT. S.V. GOWRAMMA

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Presiding Officer

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SA No. 299 of 2023

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Mr. R. Karthikeyan, S/o. Mr. Rathinasamy No.2, Karpagavinayakarkoil Street, Sembarambakkam, Thiruvallur District Tamil Nadu – 600 123

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….Applicant

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-Vs-

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The Authorized Officer, RBL Bank Limited Sai Kalyani Towers Old No.105, New No.56, G.N. Chetty Road, T. Nagar, Chennai – 600 017 Counsels on record / appeared:

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….Respondent

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Counsel for Applicant : M/s. G. Sanjeevi Counsel for Respondent : M/s. M. Ajmal Azzath

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:O R D E R:

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The present Securitization Application [SA] is filed under sub section [1] of S.17 of the Securitization And Reconstruction of Financial Asset and Enforcement of Security Interest Act,2002 (for short the ‘Act’) challenging the action and the measure taken by the secured creditor under the Security Interest Enforcement Rules, 2002 [for short the Rules].

SA No.299/2023

20.03.2025

The Applicant is a borrower has challenged the 13(4) Possession Notice dated 13.04.2023 and the outstanding amount due is Rs. 24,75,111.53/-.

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Pleadings of the Applicant:

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3.1 The Applicant is the borrower, who had availed the loan in the year 2019 for a sum of Rs.25,00,000/- and have created equitable mortgage favouring the Respondent Bank and executed all loan documents.

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3.2 Due to COVID-19, the Applicant faced serious struggle in job and which is also resulted in business loss. Hence, he defaulted in the repayment and the Bank has classified the account as NPA, which is incorrect, false and violative of the guidelines prescribed by the RBI.

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3.3 The Respondent claimed to have issued the Demand Notice dated 06.12.2022 calling upon the Applicant to pay the amount and as per Section 2(o) of the SARFAESI Act. The Respondent has not classified the loan account as NPA in accordance with the directions of the RBI. Hence, the classification of the Account is not an NPA and the Respondent have no authority whatsoever to enforce their security interest.

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3.4 It is contended that the Bank has charged the interest and penal interest, which is against the RBI guidelines and the Applicant has made substantial payment even after the issuance of the demand notice, which the Bank has not taken proper credit.

SA No.299/2023

20.03.2025

3.5 The Bank without considering the request of the Applicant have issued the Possession Notice under Section 13(4) dated 13.04.2023 and the Applicant is seriously tried to mobilize the fund to settle the account.

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3.6 The property, which is the subject matter in the SA, is the only property of the Applicant and the Bank has taken the measures without issuing the Section 13(2) Demand Notice, hence the Possession Notice is contrary to law.

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The Bank did not give reasonable opportunity to clear the loan amount of Rs.24,75,111.53/- due as on 30.11.2022 and had hurriedly issued Possession Notice dated 13.04.2023.

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3.7 The Bank without following the procedures has issued the Section 13(4) Possession Notice without issuing the demand notice. The possession notice does not contain property measurement and identification of the secured asset, which is violative of Rule 8 of the Security Interest Enforcement Rules, 2002.

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3.8 The Bank without application of mind have not replied to the representation of the Applicant seeking time for repayment. Hence on these grounds, the Applicant prays to set aside the Possession Notice dated 13.04.2023.

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Objections of the Respondent Bank:

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4.1 The Respondent Bank in their Counter submits that the present SA is neither maintainable in the eye of law or on facts, and the Applicant has filed the present SA only to evade the repayment of the outstanding due in the loan account and denies all the allegations made in the present SA.

SA No.299/2023

20.03.2025

4.2 The Applicant during the course of business approached the Bank to avail the loan facility against creation of Security interest for a sum of Rs.25,00,000/- vide Loan Account No.809002081174. After the disbursal of the loan, the Applicant has executed the loan documents agreeing to repay the monthly EMI towards the loan. Futher, the Applicant have executed the mortgage deed in favour of the Respondent Bank vide Registration No.1023/2019 dated 18.03.2019 on the file of Poonamallee, SRO, Chennai.

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4.3 The Applicant did not make the payment, as per the terms and conditions of the loan and defaulted in the repayment. Even after repeated request by the Bank, to clear the outstanding amount due in the loan account, the Applicant became a chronic defaulter and did not bother to make the repayment and they were liable to pay a sum of Rs.24,73,262/- due as on 06.05.2024.

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4.4 As the Applicant were irregular in repayment, the Account of the Applicant was classified as NPA on 07.04.2022 and notice under Section 13(2) Demand Notice was sent on 19.12.2022. The Section 13(2) Demand Notice was published in two leading Newspapers on 19.12.2022. The Possession Notice is also published in two leading Newspapers on 19.04.2023 and at this point the Applicant has filed the present SA and had failed to comply the Interim Order dated 13.06.2023. Hence, the Respondent Bank prays for the dismissal of the SA.

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5. Heard the submissions of both the Counsels and perused the records of the case.

SA No.299/2023

20.03.2025

5.1 The records of the case clearly reflects that the Applicant Mr. R. Karthikeyan representing the firm M/s. Karthikeyan Mess has availed a loan amount of Rs.25,00,000/- for his business purpose and Mrs. K. Geetha, W/o Mr. R. Karthikeyan is the guarantor to the loan availed.

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5.2 It is evident from the documents produced by the Bank that they have mortgaged the property (as mentioned in the schedule hereunder) as collateral security towards credit facility availed. The Respondent Bank has produced the Memorandum Deposit of Title Deeds dated 18.03.2019 (at Page No.58-66) of the typed set.

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5.3 As the Applicant did not repay the amount regularly, as per the terms of the sanction and after classifying the account as NPA, the Respondent Bank has initiated measures under SARFAESI Act.

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5.4 It is pertinent to note that the Applicant does not dispute the availing of credit facility execution of the loan documents and creation of mortgage favouring the Respondent Bank, which constitutes a secured asset.

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5.5 In fact the default is also admitted by the Applicant Bank in the SA averments. As the account was irregular the Respondent Bank has classified the account as NPA on 07.04.2022, as secured asset has initiated measures under the SARFAESI Act by issuing Section 13(2) Demand Notice dated 19.12.2022. Section 13(2) Demand Notice was issued to the Applicant describing the loan availed, the outstanding amount due and the description of the mortgage property as collateral security. Further in the Section 13(2) Demand Notice clearly mentioned the classification of the account as NPA on 07.04.2022. The Applicant

SA No.299/2023

20.03.2025

attention is also drawn to Section 13(3) of SARFAESI Act intimating not to transfer the secured asset by way of a sale, lien or otherwise.

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The Section 13(2) Demand Notice clearly mention that the Applicant has to pay the outstanding liability of Rs.24,75,111.53/- within a period of 60 days from the date of notice, failing which the Bank would take recovery measures, as prescribed under Section 13(4) of the SARFAESI Act.

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5.6 The Section 13(2) Demand Notice is sent by RPAD and postal receipts and the postal track report produced by the Respondent Bank (at Page No.71-72) clearly reflects that Section 13(2) Demand Notice is duly served on them. It is also seen that the contents of the demand notice is also published in the Newspaper, as abundant caution.

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5.7 It is a matter of fact that the Applicant does not dispute the default in repayment towards the loan account, the classification of account as NPA and issuance of Section 13(2) Demand Notice.

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5.8 In spite of receipt of Section 13(2) Demand Notice, the Applicant failed to clear the entire outstanding liability as mentioned in the Section 13(2) Demand Notice nor raised any objection to the demand made, as required under Section 13 (3A) of the Act. Hence, the Respondent Bank have proceeded further in issuing the Section 13(4) Possession Notice dated 13.04.2023, which is impugned in the present SA. The Possession Notice is also sent by RPAD and the postal receipt and postal track report produced by the Respondent Bank in the Counter at Page No.74-75.

SA No.299/2023

20.03.2025

5.9 In furtherance to issuance of Section 13(4) Possession Notice, the Respondent Bank has also affixed the Possession Notice on the secured asset and the photograph evidencing the affixture is produced in Page No.76 and the publication of the Section 13(4) Possession Notice in English and Tamil Newspaper dated 19.04.2023 is also produced at Page No.77 & 78. Thus, it is seen that the Respondent Bank have complied with all procedures in issuing the Section 13(2) Demand Notice dated 19.12.2022 and Section 13(4) Possession Notice dated 13.04.2023 by following procedures, as prescribed under the Acts and Rules.

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5.10 The Respondent Bank has also produced the Closure Statement of Loan Account at Page No.82-89 intimating the Applicant closure balance to close the outstanding liability in the loan account, as on 21.04.2021.

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5.11 On cumulative examination of the facts, pleading and the documents produced, it is evident that the Respondent Bank, as secured creditor has initiated the measures after classifying the account as NPA and have issued the Section 13(2) Demand Notice dated 19.12.2022, which is duly served, as per the procedures. Further, the Possession Notice under Section 13(4) dated 13.04.2023 is also duly served, as per the prescribed format and the procedures are duly complied by the Respondent Bank.

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5.12 The Respondent Bank, as secured creditor have established the due compliance of the measures taken by them under the Act with supporting documents, on the other hand the Applicant has failed to make out a case for interference of the Tribunal in setting aside the measures.

SA No.299/2023

20.03.2025

For the foregoing reasons, the measures taken by the Respondent Bank are held as valid and the Section 13(2) Demand Notice dated 19.12.2022 and Section 13(4) Possession Notice dated 13.04.2023 are held as valid notices issued under the Act.

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Accordingly, the present SA stands dismissed. Interim Order granted, if any stands vacated, pending IAs are disposed of in terms of this final order. No order as to cost.

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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(Dictated to Steno (Sudhakar), transcribed by him, corrected, signed and pronounced by me on this the 20^th day of March, 2025)

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ANNEXURES

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INDEX TO TYPED SET OF DOCUMENTS RELIED ON BY THE APPLICANT

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Exhibits on the part of the Applicant:

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Sl. No.	Description of Documents	Exhibit No.
1.	Memorandumof Applicationdated11.05.2023	A-1
2.	Possession Notice dated13.04.2023	A-2
3.	Vakalathdated11.05.2023	A-3

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Exhibits on the part of the Respondent:

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TYPED SET OF DOCUMENTS FILED BY THE RESPONDENT

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Sl. No.	Description of Documents	Exhibit No.
1.	Powerof Attorney dated 30.05.2023	R-1
2.	Application Formdated16.03.2019	R-2
3.	Sanction Letterdated16.03.2019	R-3
4.	Loan Agreement dated16.03.2019	R-4

SA No.299/2023

20.03.2025

5.	Sale Deed executed by Mr. Karthikeyan No.359/2005 dated21.02.2005	Doc	R-5
6.	Memorandum of Deposit Title Deeds – No.1023/2019 dated18.03.2019	Doc	R-6
7.	Demand Notice of U/s 13(2) SARFAESI Act alon Postal receipts dated19.12.2022	g with	R-7
8.	Demand Notice of U/s 13(2) SARFAESI Act Publication Tamildated19.02.2022	Paper	R-8
9.	Possession Notice U/S 13(4) SARFAESI Act alon Postal receipts dated13.04.2023	g with	R-9
10.	Photos affixtures dated13.04.2023		R-10
11.	Possession Notice U/S 13(4) SARFAESI Act Publication Englishdated19.04.2023	Paper	R-11
12.	Possession Notice U/S 13(4) SARFAESI Act Publication Tamildated19.04.2023	Paper	R-12
13.	Foreclosure & Statement of Account dated 06.05.2	024	R-13

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SCHEDULE OF PROPERTY

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DESCRIPTION OF THE IMMOVABLE PROPERTY

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All that piece and parcel of land and building comprised in Grama Natham S. No.226, New S. No.365/2, measuring an extent of 450 Sq.ft., situated at Sembarambakkam Village, Poonamallee Revenue Taluk, Tiruvallur District and situated within the Registration District of Chennai – South and Sub-Registration District of Poonamallee and bounded on

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North by : 22.5 Feet Road

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South by : House and shop belongs to Devaraj

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East by : Vacant Land belongs to Karunamoorthy

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West by : 20 Feet Road

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Sd/(S.V. GOWRAMMA) PRESIDING OFFICER, DRT-III, CHENNAI

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SA No.299/2023 10 20.03.2025

R Karthikeyan v. Rbl Bank Limited

Case brief

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R Karthikeyan v. Rbl Bank Limited

Case brief

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